This is among the feasible theoretical explanations of the occasion on May 14, 2010 when the securities market highly plunged down. The very same theory can be utilized to clarify strong declines during securities market accidents.

On May 14, 2010 the US securities market plunged highly down by defeating all historic records. The DOW Jones Industrials, S&P 500 and other indexes experienced huge losses. Some public companies went down to dimes from $30 and higher. Later, media described this occasion as a computer system mistake, then as a human error, than the media revealed that exchanges began to explore this fall and later on everyone ignored these uncommon happenings. When trying to recognize events of the plunge it is advised referring to the basics concepts of the stock market rate movements. The first and the most fundamental guideline of the stock exchange is that cost is driven by supply and need. If a trader (investor) should offer a stock he or she offers it at market price. Now, if an investor should to market 10,000 (10 many thousands) shares of a public firm he has to locate a purchaser who would certainly buy these 10 thousand shares. If there is insufficient buyers to cover demand to market ten thousand shares then the rate of this stock goes down up until there are enough buyers to purchase these shares. Obviously, the stock market operates by billions and 10K is fairly handful which does not greatly influence price of a stock. The second point that needs to be removed is that there could be 2 situations: clenched fist is when an investor wishes to market stocks and second when an investor must to market. In initial case, if cost goes rapidly down (plunges) an investor may alter his/her mind and choose not to offer yet hang around when the traded stock recovers. Second case normally occurs when a stop-loss is struck or when a trader has actually obtained a last margin call. Whether it is a stop-loss or margin call it is not an investor that places an order to offer however a broker and in this case a stance should to be gotten rid of (shut) at any kind of feasible market price. Now, coming back to May 14, 2010 you may attempt to imagine that throughout thedecline big number of stop-losses was attacked. I am not looking at situation with margin calls given that in this instance, generally, there are many days up until margin is carried out. When stop-losses are attacked, brokers place orders to cost market value. Now, due to an error in computer system, or as a result of human error, as was simply as soon as mentioned in CNN “driver entered B (Billions) in place of K (many thousands)”, or by any other reason there were put orders to offer billions of shares. Given that there were no buyers for such huge volume of stocks, price plunged down. One massive drop in one stock might generate chain reaction. If this stock is specified in the indexes (, DJI,, etc) then this stock's decrease drags the indexes down, then other stocks begins to comply with the indexes then new stop-losses are struck and additional sell orders are placed on the market then all repeats over and over and it accelerates into the accident. Please keep in mind that above just an assumption of possible circumstance of May 14th occasions.

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